Altice USA Sets Plan to Reach 500K Homes with FTTH

Cable MSO continues to see increasing adoption of FTTH and customer satisfaction rates. 

  • Altice USA

Altice USA has set an aggressive pace to expand its fiber-to-the-home (FTTH) footprint, with plans to reach 500,000 locations in 2021. From the looks of it, the cable MSO is moving fast on that goal.

At the end of Q1 2021, Altice USA equipped 1 million homes, or about 20 percent of its Optimum footprint, with FTTH service. The cable MSO’s FTTH sell-in to new customers increased to approximately two-thirds of gross additions in areas where FTTH is available in the first quarter, up from 14 percent in first quarter 2020.

Penetration of homes passed with FTTH is 3.6 percent, compared with 0.7 percent in the first quarter of 2020. The cable MSO remains confident that it can deliver a better customer experience, as well as achieve capex and opex efficiencies Following the completion of its FTTH build.

Dexter Goei, CEO of Altice USA, told investors during the company’s first-quarter earnings call that it is on track to return to the similar growth rates it saw before the COVID-19 pandemic drove permitting delays in 2020.

“We are currently on track to pass half a million homes this year, more in line with 2019 levels before the pandemic slowed down the permitting process in 2020,” he said. “Following the commercial launch of our fiber double- and triple-play offerings in the second half of last year, fiber selling rates have picked up to about two-thirds of gross additions, up from just 14 percent a year ago.”

As Altice USA expands the FTTH footprint, Goei said it is enhancing customer relationships.

“We are already seeing 25 percent higher customer satisfaction from our installed fiber customer base compared with our HFC cable customers,” he said.

Gigabit Adoption Rising

Though it is still early in the game, a growing number of Altice USA’s FTTH subscribers are adopting 1 Gbps speed services. Two-thirds of the gross adds in its fiber footprint are taking the service.

Today, Altice USA 1 Gig broadband capability is available across 92 percent of Altice USA's consolidated footprint. In the first quarter, new customers sales of 1 Gbps rose 43 percent, up from 13 percent in the first quarter of 2020.

But with less than 10 percent of the total customer base taking gigabit speeds, Goei said that it has plenty of room to grow 1 Gbps and higher broadband speeds as demand dictates.

Today, more than 50 percent of its customer base subscribes only to 200 Mbps or lower-tier broadband.

“It clearly is a great signal for us that we're seeing such high demand of symmetric 1-gig speeds in our fiber footprint, and we expect that to continue to accelerate,” he said. “So as our road map is going to accelerate from 1 gig to more than 1 gig over the next couple of years, we have a really nice runway to continue to push high-speed broadband, and … to continue to drive upsells in the product.”

Outside of the fiber footprint, Altice USA is continuing to progress toward supporting 1 Gbps services via its DOCSIS 3.1 network upgrade efforts.

“The completion of our DOCSIS 3.1 upgrade last year to support 1-gig availability across 100 percent of the Optimum footprint increased our opportunity to continue to upsell customers to higher broadband speed tiers,” Goei said. “Our 1-gig customer penetration increased to 9.8 percent in the first quarter, up from 2.4 percent a year ago.”

Altice USA is also seeing its users increase their download bandwidth speeds. Over the past three years, the cable MSO’s average download speeds have more than doubled to 302 Mbps.

“This was accelerating as customers are increasingly buying into and valuing the step-up to 1 gig” Goei said, and it “is a great indication of the long-term improved customer experience we're expecting from our fiber investments, not to mention the additional long-term opex and capex efficiencies.”

Competitive Opportunities Abound

As Altice USA continues to extend broadband services into more markets over FTTH and HFC, the cable MSO sees opportunities to take more market share not only in areas where Verizon offers Fios, but also where AT&T offers only DSL services today.

Today, Altice USA sees only about 25 percent of its gross addition subscriber activity taking place in the Fios footprint. At the same time, it is trying to keep pace with aggressive pricing schemes made by either Verizon Fios or other fiber overbuilders.

When Verizon began ramping up its new installations late last year, Goei said that the telco was able to lure some subscribers away.

“It did not surprise us that in Q3 and Q4 last year, when Fios was back online relative to the second quarter, where [it was] pretty much offline in terms of installs, that [it was] a lot more aggressive and took some market share, then and we gave back some – and we saw those numbers in the back half of 2020,” Goei said.

AT&T, meanwhile, has overbuilt fiber into 8–10 percent of Altice USA’s Suddenlink footprint. The remaining markets where it can build out only have DSL.

“We don't believe that the remainder DSL footprint, which is about 40 percent of the additional footprint in Suddenlink, is going to be the priority for AT&T to overbuild, given the small rural communities that they serve, but we're monitoring that very closely,” Goei said. “So, we're not seeing anything different.”


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